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Introducing DYDX – The L1 Token of the dYdX Chain

–News Direct–

The dYdX Foundation highlights that, on October 26 at 17:00 UTC, the first block of the dYdX Chain mainnet was created (Genesis) by dYdX Chain Validators. The creation of the first block of the dYdX Chain and the adoption of DYDX as the Layer 1 token of the network lead to new utility for the DYDX token on the dYdX Chain. Below youll find some details and highlights about the role of DYDX within the dYdX Chain, how the token has evolved and how protocol fees are distributed to Validators and Stakers on the dYdX Chain.

The dYdX Chain is a proof-of-stake blockchain network built using the Cosmos SDK and leveraging CometBFT for consensus. The dYdX Chain requires a Layer 1 protocol token that can be staked to Validators to secure the chain and to assist with governance of the network.

On the dYdX Chain, all fees (trading fees denominated in USDC and gas fees for DYDX-denominated transactions or USDC-denominated transactions) collected by the protocol are distributed to Validators and Stakers.

The current DYDX token (herein ethDYDX) has been the governance token of the dYdX Layer 2 protocol on Ethereum (dYdX v3) since it was released on August 3, 2021. Recently, the dYdX community voted to adopt DYDX as the L1 token of the dYdX Chain, adopt a one-way bridge from Ethereum to the dYdX Chain and to give wrapped Ethereum DYDX (wethDYDX) the same governance utility as ethDYDX in dYdX v3.

Expanded utility of DYDX on the dYdX Chain

Based on dYdX community decisions through dYdX governance, the utility of the DYDX token has expanded: DYDX may now be used for staking, securing the network, and assisting with governance on the dYdX Chain.

Staking

In any proof-of-stake (PoS) blockchain network, the role of Stakers is pivotal in shaping the security and strength of the network, and the dYdX Chain is no exception. On the dYdX Chain, DYDX holders have the option to serve as Validators or to delegate their stake to existing Validators. Staking secures and protects the network and enables the Staker to receive dYdX Chain protocol fees in proportion to their stake weight.

On the dYdX Chain, all fees (trading fees denominated in USDC and gas fees for DYDX-denominated transactions or USDC-denominated transactions) collected by the protocol are distributed to Validators and Stakers. The distribution of protocol fees on the dYdX Chain is facilitated through the Cosmos x/distribution module.

Security

Proof-of-Stake blockchains gain their security by assigning the verification and confirmation of transactions to one of their main stakeholder groups: Validators. With significant economic value at stake, Validators are incentivized to maintain the integrity of the ledger, lest they suffer substantial losses. Staking DYDX directly contributes to dYdX Chain security; as more DYDX holders choose to stake their tokens across a diverse range of Validators in the network, and the total amount of stake on the network increases, it becomes increasingly difficult for a coordinated attack to influence a consensus decision.

Simply put, the more native DYDX tokens that are staked or bonded to dYdX Chain Validators and the more distributed the stake across multiple Validators, the more secure and resilient the network becomes.

Governance

The dYdX Chain leverages the standard x/gov module within the Cosmos SDK. As such, we anticipate that governance on the dYdX Chain will be more accessible than dYdX v3 governance.

For example:

  1. Many of the modules in the dYdX Chain open source software have parameters that are controlled by dYdX Chain governance.

  2. The dYdX Chain does not have the dYdX v3 concept of Proposing Power; instead, the governance module effectively enables any holder to create a governance proposal with a deposit. However, the governance module leverages the MinDeposit threshold and the NoWithVeto vote option to control for spam proposals.

Please note:

  • Only staked DYDX tokens will be able to be used in dYdX Chain governance.

  • dYdX Chain Validators inherit the voting weight of their Stakers, unless a Staker decides to vote on a proposal themselves.

More details on the evolution of DYDX from a governance token in dYdX v3 to the L1 token of the dYdX Chain can be found in this blog post.

About dYdX Foundation

dYdX Foundations purpose is to support the current and future implementations of the dYdX protocol and foster community-driven growth in the dYdX ecosystem.

The dYdX Chain software is solely open-source software to be used or implemented by any party in accordance with the applicable license. At no time should the dYdX Chain software be deemed to be a product or service provided or made available in any way by the dYdX Foundation. Interactions with the dYdX Chain software are permissionless and disintermediated, subject to the terms of the applicable licenses and code. Users who interact with the dYdX Chain software (or any implementations thereof) will not be interacting with the dYdX Foundation in any way whatsoever. The dYdX Foundation has no control of any kind over the use that people make of the dYdX Chain software, including, without limitation, with regard to: (i) potential deployments of such software, (ii) potential adaptations, forks or modified versions of such software, and their deployment, or (iii) users interactions with such software or deployments of such software. The dYdX Foundation does not make any representations, warranties or covenants in connection with the dYdX Chain software (or any implementations thereof), including (without limitation) with regard to the technical properties and performance of such software, as well as its actual or potential usefulness or suitability for any particular purpose. The dYdX Foundation will not operate any part of the dYdX Chain software (or any implementations, versions or adaptations thereof) nor will it be responsible for their continued availability.

Nothing in this post should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act by anyone. The dYdX Foundation makes no recommendation as to how to vote on any proposal in dYdX governance, or to take any action whatsoever. The dYdX community is sovereign to make decisions freely and at its sole discretion, in accordance with the governance rules, principles, and mechanisms adopted by the dYdX DAO. The dYdX Foundation does not directly participate in governance decisions to be made by the dYdX community, including, without limitation, by making and/or voting on governance proposals. The dYdX Foundation may alter or update any information in this post in the future and assumes no obligation to publicly disclose any such change. This post is solely based on the information available to the dYdX Foundation at the time it is made and should only be read and taken into consideration at the time it is made and on the basis of the circumstances that surround it. The dYdX Foundation makes no guarantees and is under no obligation to undertake any of the activities contemplated herein.

Contact Details

Avishay Litani

pr@marketacross.com

View source version on newsdirect.com: https://newsdirect.com/news/introducing-dydx-the-l1-token-of-the-dydx-chain-475321842

dYdX Foundation

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COMTEX_442544944/2655/2023-10-27T15:49:00

Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Micro Trustiva journalist was involved in the writing and production of this article.